Tag: finance

32 Tips For Navigating A Society Full Of Propaganda And Manipulation

Authored by Caitlin Johnstone via Medium.com,

For as long as there has been human language, humans have been using it to manipulate one another. The fact that it is possible to skillfully weave a collection of symbolic mouth noises together in such a way as to extract favors, concessions, votes and consent from other humans has made manipulation so common that it now pervades our society from top to bottom, from personal relationships between two people to international relationships between government agencies and the public.

This has made it very difficult to figure out what’s going on, both in our lives and in the world. Here are some tips for navigating this complex manipulation-laden landscape, whether that be the manipulations you may encounter in your small-scale personal interactions or the large-scale manipulations which impact the entire world:

1 — Understand the fact that humans are storytelling animals, and that whoever controls the stories controls the humans. Mental narrative dominates human consciousness; thought is essentially one continuous, churning monologue about the self and what it reckons is going on in its world, and that monologue is composed entirely of mental stories. These stories can and will be manipulated, on an individual scale by people we encounter and on a mass scale by skillful propagandists. We base our actions on our mental assessments of what’s going on in the world, and those mental assessments can be manipulated by narrative control.

2 — Be humble and open enough to know that you can be fooled. Your cognitive wiring is susceptible the same hacks as everyone else, and manipulators of all sorts are always looking to exploit those vulnerabilities. It’s not shameful to be deceived, it’s shameful to deceive people. Don’t let shame and cognitive dissonance keep you compartmentalized away from considering the possibility that you’ve been duped in some way.

3 — Watch people’s behavior and ignore the stories they tell about their behavior. This applies to people in your life, to politicians, and to governments. Narratives can be easily manipulated and distorted in many different ways, while behavior itself, when examined with as much objectivity as possible, cannot be. Pay attention to behavior in this way and eventually you’ll start noticing a large gap between what some people’s actions say and what their words say. Those people are the manipulators. Distrust them.

4 — Be suspicious of people who keep telling you what they are and how they are, because they’re trying to manipulate your narrative about them. Be doubly suspicious of people who keep telling you what you are and how you are, because they’re trying to manipulate your narrative about you.

5 — Learn to see how trust and sympathy are used by manipulators to trick people into subscribing to their narratives about what’s going on. Every manipulator uses trust and/or sympathy as a primer for their manipulations, because if you don’t have trust or sympathy for them, you’re not going to mentally subscribe to their stories. This is true of mass media outlets, it’s true of State Department press releases which implore you to have sympathy for the people of Nation X, and it’s true of family members and coworkers. Once you’ve spotted a manipulator, your task is to kill off all of your sympathy for them and your trust in them, no matter how hard they start playing the victim to suck you back in.

6 — Be suspicious of anyone who refuses to articulate themselves clearly. Word salading is a tactic notoriously used by abusive narcissists, because it keeps the victim confused and unable to figure out what’s going on. If they can’t get a clear handle on what the manipulative abuser is saying, they can’t form their own solid position in relation to it, and the abuser knows this. Insist on lucid communication, and if it’s refused to you, remove trust and sympathy. Apply this to people in your life, to government officials, and to 8chan propaganda constructs.

7 — Familiarize yourself with cognitive biases, the glitches in human cognition which cause us to perceive things in a way that is not rational. Pay special attention to confirmation bias, the backfire effect, and the illusory truth effect. Humans have an annoying tendency to seek out cognitive ease in their information-gathering and avoid cognitive dissonance, rather than seeking out what’s true regardless of whether it brings us cognitive ease or dissonance. This means we tend to choose what we believe based on whether believing it is psychologically comfortable, rather than whether it’s solidly backed by facts and evidence. This is a weakness in our cognitive wiring, and manipulators can and do exploit it constantly. And, again, be humble enough to know that this means you.

8 — Trust your own understanding above anyone else’s. It might not be perfect, but it’s a damn sight better than letting your understanding be controlled by narrative managers and dopey partisan groupthink, or by literally anyone else in a narrative landscape that is saturated with propaganda and manipulation. You won’t get everything right, but betting on your own understanding is the very safest bet on the table. It can be intimidating to stand alone and sort out the true from the false by yourself on an instance-by-instance basis, but the alternative is giving someone else authority over your understanding of the world. Abdicating your responsibility to come to a clear understanding of what’s going on in your world is a shameful, cowardly thing to do. Be brave enough to insist that you are right until such time as you yourself come to your own understanding that you were wrong.

9 — Understand that propaganda is the single most overlooked and under-appreciated aspect of our society. Everyone’s constantly talking about what’s wrong with the world, but hardly any of those discussions are centered around the fact that the public been manipulated into supporting the creation and continuation of those problems by mass media propaganda. The fact that powerful people are constantly manipulating the way we think, act and vote should be at the forefront of everyone’s awareness, not relegated to occasional discussions in fringe circles.

10 — Respect the fact that the science of modern propaganda has been in research and development for over a century. Think of all the military advancements that have been made in the last century to get an idea of how sophisticated this science must now be. They are far, far ahead of us in terms of research and understanding of the methods of manipulating the human psyche toward ends which benefit the powerful. If you ever doubt that the narrative managers could be advanced and cunning enough to pull off a given manipulation, you can lay that particular doubt to rest. Don’t underestimate them.

11 — Understand that western mass media propaganda rarely consists of full, outright lies. At most, such outlets will credulously publish the things that are told to them by government agencies which lie all the time. More often, the deception comes in the form of distortions, half-truths, and omissions. Pay more attention to discrepancies in things that are covered versus things that aren’t, and to what they’re not saying.

12 — Put effort into developing a good news-sense, a sense for what’s newsworthy and what’s not. This takes time and practice, but it lets you see which newsworthy stories are going unreported by the mass media and which non-stories are being overblown to shape an establishment-friendly narrative. When you’ve got that nailed down, you’ll notice “Why are they acting like this is a news story?” and “Why is nobody reporting this??” stories all the time.

13 — Be patient and compassionate with yourself when it comes to developing your narrative navigating skills. Like literally any skill set, you’ll suck at it for a while. If you learn you’ve been wrong about something, just take in the new information, adjust appropriately, and keep plugging away. Don’t expect to have mastered this thing before you’ve had time to master it. Like anything else, if you put in the hours you’ll get good at it.

14 — Find reliable news reporters who have a good sense for navigating the narrative matrix, and keep track of them to orient yourself and stay on top of what’s going on. Use individual reporters, not outlets; no outlet is 100 percent solid, but some reporters are pretty close on some specific subjects. Click this hyperlink for an article on one way to do build a customized and reliable news stream. Click this hyperlink for a list of all my favorite news reporters on Twitter right now.

15 — Don’t let paranoia be your primary or only tool for navigating the narrative matrix. Some people’s only means of understanding the world is to become intensely suspicious of everything and everyone, which is about as useful as a compass which tells you that every direction is north. Spend time in conspiracy and media criticism circles and you’ll run into many such people. Rejecting everything as false leaves you with nothing as true. Find positive tools for learning what’s true.

16 — Hold your worldview loosely enough that you can change it at any time in the light of new information, but not so loosely that it can be slapped out of your head by someone telling you what to think in a confident, authoritative tone. As Carl Sagan once said, “It pays to keep an open mind, but not so open your brains fall out.”

17 — Speaking of confident, authoritative tones, be suspicious of confident, authoritative tones. It’s amazing how much traction people can get with a narrative just by posturing as though they know that what they’re saying is true, whether they’re an MSNBC pundit or a popular conspiracy Youtuber. So many people are just plain faking it, because it works. You run into this all the time in debates on online political forums; people come at you with a supremely confident posture, but if you push them to present their knowledge on the subject and the strength of their arguments, there’s not actually anything there. They’re just accustomed to people assuming they know what they’re talking about and leaving their claims unchallenged, and it completely throws them off when someone doesn’t buy their feigned confidence schtick.

18 — Be aware that sociopaths exist. There are people who, to varying degrees, do not care what happens to others, and these are the types of people who will use manipulation to get their way whenever it serves them. If you don’t care about truth or other people beyond the extent to which you can use them, then there’s no disincentive to manipulating.

19 — Be aware of projection, and be aware of the fact that it cuts both ways: unhealthy people tend to project their wickedness onto others, while healthy people tend to project their goodness. Don’t let your goodness trick you into thinking there aren’t monsters who will deceive and manipulate you, and don’t let sociopaths project their own sinister motives onto you by telling you how rotten you are. This mixes a lot of good people up, especially in their personal lives. Not everyone is good, and not everyone is truthful. See this clearly.

20 — Be suspicious of those who excessively advocate civility, rules and politeness. Manipulators thrive on rules and civility, because they know how to manipulate them. Someone who’s willing to color outside the lines and get angry at someone noxious even when they’re acting within the rules makes a manipulator very uncomfortable. Often times those telling you to calm down and behave yourself when you are rightfully upset are manipulators who have a vested interest in getting you to adhere to the rules set they’ve learned to operate within.

21 — Meditation, mindfulness, self-inquiry and other practices are powerful tools which can help you understand your own inner processes, which in turn helps you understand how manipulators can manipulate you, and how they manipulate others. Just be sure that you are using them for this purpose, not for escapism as most “spiritual” types do. You’re trying to become fully aware of what makes you tick mentally, emotionally and energetically; you’re not trying to become some vapid spiritual bliss bunny. The goal isn’t to feel better, the goal is to get better at feeling. Better at consciously experiencing your own inner world.

22 — Be relentlessly honest with yourself about your own inner narratives and the various ways you engage in manipulation. You can’t navigate your way through the narrative control matrix if you aren’t clear on your own role in it. Look inside and consciously take an inventory.

23 — Understand that truth doesn’t generally move in a way that is pleasing to the ego, i.e. in a way Hollywood scripts are written to appeal to. Any narrative that points to a Hollywood ending where the bad guy gets karate kicked into lava and the hero gets the girl is manufactured. Russiagate and QAnon are both perfect examples of an egoically pleasing narrative with the promise of a Hollywood ending, either by Trump and his cohorts being dragged off in chains or by the “white hats” overcoming the Deep State and throwing all the Democrats and Never-Trumpers in prison for pedophilia. Ain’t gonna happen, folks.

24 — Try to view the world with fresh eyes rather than with your tired old grown-up eyes which have taught you to see all this as normal. Hold an image in your mind of what a perfectly healthy and harmonious world would look like; the sharp contrast between this image and the world we have now allows you see through the campaign of the propagandists to normalize things like war, poverty, ecocide, and impotent electoral systems which keep seeing the same government behavior regardless of who people vote for. None of this is normal.

25 — Know that the truth has no political party, and neither do the social engineers. All political parties are used to manipulate the masses in various ways, and nuggets of truth can and do emerge from any of them. Thinking along partisan lines is guaranteed to give you a distorted view. Ignore the imaginary lines between the parties. You may be certain that your rulers do.

26 — Remain always aware of this simple dynamic: the people who become billionaires are generally the ones who are sociopathic enough to do whatever it takes to get ahead. This class has been able to buy up near-total narrative control via media ownership/influence, corporate lobbying, think tank funding, and campaign finance, and are thus able to manipulate the public into consenting to agendas which benefit nobody but plutocrats and their lackeys. This explains pretty much every major problem that we are facing right now.

27 — Understand that nations are pure narrative constructs; they only exist to the extent that people agree to pretend that they do. The narrative managers know this, and they exploit the fact that most of us don’t. Take Julian Assange, perfect example: he was pried out of the embassy and imprisoned by an extremely obvious collaboration between the US, UK, Sweden, Ecuador, and Australia, yet they each pretended that they were acting as separate, sovereign nations completely independently of one another. Sweden pretended it was deeply concerned about rape allegations, the UK pretended it was deeply concerned about a bail violation, Ecuador pretended it was deeply concerned about skateboarding and embassy cat hygiene, the US pretended it was deeply concerned about the particulars of the way Assange helped Chelsea Manning cover her tracks, Australia pretended it was too deeply concerned about honoring the sovereign affairs of these other countries to intervene on behalf of its citizen, and it all converged in a way that just so happened to look exactly the same as imprisoning a journalist for publishing facts. You see this same dynamic constantly, whether it’s with military interventions, trade deals, or narrative-shaping campaigns against non-aligned governments.

28 — Understand that war is the glue which holds the US-centralized empire together. Without the carrot of military/economic alliance and the stick of military/economic violence, the US-centralized empire would cease to exist. This is why war propaganda is constant and sometimes so forced that glaring plot holes become exposed; it’s so important that they need to force it through, even if they can’t get the narrative matrix around it constructed just right. If they ceased manufacturing consent for the empire’s relentless warmongering, people would lose all trust in government and media institutions, and those institutions would lose the ability to propagandize the public effectively. Without the ability to propagandize the public effectively, our rulers cannot rule.

29 — Remember that when it comes to foreign policy, the neocons are always wrong. They’ve been so remarkably consistent in this for so long that whenever there’s a question about any narrative involving hostilities between the US-centralized power alliance and any other nation, you can just look at what Bill Kristol, Max Boot and John Bolton are saying about it and believe the exact opposite. They’re actually a very helpful navigation tool in this way.

30 — Notice how the manipulators like to split the population in two and then get them arguing over how they should serve the establishment. Arguing over whether it’s better to vote Democrat or Republican, arguing over whether it’s better to increase hostilities with Iran and Venezuela or with Syria and Russia, over whether you should support the US president or the FBI, arguing over how internet censorship should happen and whom should be censored rather than if censorship should happen in the first place. The longer they can keep us arguing over the best way to lick the imperial boot, the longer they keep us from talking about whether we want to lick it at all.

31 — Watch out for appeals to emotion. It’s much easier to manipulate someone by appealing to their feely bits rather than their capacity for rational analysis, which is why any time they want to manufacture support for military interventionism you see pictures of dead children on news screens everywhere rather than a logical argument for the advantages of using military violence based on a thorough presentation of facts and evidence. You see the same strategy used in the guilt trips they lay on third-party voters; it’s all emotional hyperbole that crumbles under any fact-based analysis, but they use it because it works. They go after your heart strings to circumvent your head.

32 — Pay attention to how much propaganda goes into maintaining the propaganda machine itself. This is done this because propaganda is just that central to the maintenance of dominant power structures. Much effort is spent building trust in establishment narrative management outlets while sowing distrust in sources of dissent. You’ll see entire propaganda campaigns built around accomplishing solely this.

*  *  *

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via ZeroHedge News http://bit.ly/2XovQsV Tyler Durden

Dovish Powell Slams Yields, Dollar As He Opens The Door For More “Unconventional” Measures

One day after James Bullard opened the door for the “patient” Fed to start cutting rates and sending yields and the dollar sliding, moments ago the Fed Chair doubled down on dovishness when in opening remarks delivered to the Chicago Fed, Powell confirmed the Fed’s openness to cut interest rates if necessary, stating that the Fed’s unconventional tools are now conventonial and will “likely be needed in some form in the future” as he pledged to keep a close watch on the escalating trade war between the US and some of the world’s largest economies.

Sparking a renewed dovish kneejerk reaction was Powell’s flashing red headline that the Fed will “act as appropriate” to sustain the expansion, while affirming the the Fed is closely monitoring implications of trade negotiations for the US economic outlook as the Fed does not know how or when trade issues will be resolved.

“We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective,” Powell said in Chicago.

In a surprising twist, Powell said that with the economy growing, unempolyment low and inflation stable “it’s time to rethink long-run strategies.” Powell also hinted that both QE and ZIRP, and perhaps NIRP are on deck, stating that interest rates so close to zero “has become the preeminent monetary policy challenge of our time,” and admitting that “perhaps it is time to retire the term ‘unconventional’ when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form” in the future.”

Translation: not only is the Fed ready to cut rates, but it may take “unconventional” tools during the next recession, i.e., NIRP and even more QE.

Referring to “trade negotiations and other matters,” the Fed Chair said that “we do not know how or when these issues will be resolved.”

As Bloomberg notes, Powell’s speech was dedicated to the Fed’s yearlong goal of reviewing its monetary policy strategies, tools and communication practices. “With the economy growing, unemployment low, and inflation low and stable, this is the right time to engage the public broadly on these topics.”

Curiously, just hours before Powell’s speech, Chicago Fed President Charles Evans brushed aside the idea the Fed needed to cut rates in response to market pressure, in a surprisingly hawkish speech.

Powell, however quickly reversed the market sentiment, and his clearly dovish turn sent both the dollar…

… and 10Y yields sharply lower…

… before both rebounded to pre-comment levels in a kneejerk reaction which we doubt will be sustained.

via ZeroHedge News http://bit.ly/31hFHDc Tyler Durden

US Factory Orders Slowest Growth Since Trump Elected

Following its surprising bounce in factory orders in March, April was expected to see contraction (echoing the collapse in PMIs) and it did (dropping 0.8% MoM) and durable goods orders tumbling 2.1% MoM in their final April print.

Factory Orders were revised lower for March (from +1.9% to +1.3%) which prompted April’s 0.8% decline to look slightly better than the expected 1.0% decline.

Ex-Transports, factory orders rose just 0.3% MoM in April and new orders ex-defense for April fall 0.9% after rising 0.5% in March.

However, away from the noise and oscillation of the monthly data, year-over-year, US Factory Orders grew at just 1.0% – the slowest rate of growth since Trump was elected.

And judging by PMIs, this is about to get a lot worse.

via ZeroHedge News http://bit.ly/2ERM72d Tyler Durden

RIP: Bond Rout!

Authored by Jeffrey Snider via Alhambra Investments,

Reality has begun to dawn across Wall Street’s Economists. This year isn’t going to go the way everyone thought. Even as late as last November and December, the optimism was still sharp about how what was taking place at that moment would be nothing more than a transitory soft patch. They still listened to Jay Powell.

In its projections for this year, 2019, JP Morgan’s strategists were not truly dissuaded.

Given a Fed that continues to tighten against the backdrop of increasing Treasury supply, J.P. Morgan forecasts 10-year yields will rise to 2.95% by the second quarter of 2019 and to 3.2% by the end of the year.

Incredibly, these projections were put together on December 20, 2018. Powell had just recently reiterated his strong economy view, the one requiring more rate hikes, the Fed pause still only whispers at that point. Curve collapse was a triviality, apparently, in the face of central bank backbone.

The same bank’s same strategists have now thrown in the towel. Not all the way, at least not yet. They are now calling for much lower rates on the “strength” of at least a couple rate cuts.

According to Bloomberg, the bank is now predicting the 10-year will be just 1.75% by the end of 2018 and 1.65% by next March. Pretty stark contrast compared to what JPM’s CEO was saying at this same time last year.

Even so, as the article notes, this isn’t something they think should be feared. Oh no, there’s a lot to be optimistic about, a lot still left in the tank because the Fed will be on the move!

Despite their new forecasts, JPMorgan’s strategists warned against jumping on the current Treasuries rally, saying that they maintain a neutral call for duration. “We are hesitant to initiate longs given the pace of the rally over the last two weeks and the substantial uncertainty that remains around the path forward for trade policy.”

For their part, JPMorgan equity strategists led by Mislav Matejka still see the potential for gains in global stocks before the next American recession, bolstered by policy support and, in the U.S., buybacks.

If you think trade wars and rate hikes are what led us to this point, then the prospects for a trade deal and rate cuts lend themselves an upside out. If enough can go right, still the soft patch. After all, according to this view, the economy would otherwise be booming.

This remains the background case for most Economists. One appearing on BloombergTV was far more direct in revealing himself this way:

“It’s just a mindless bond market rally — once it gets going, it gets going,” the chief financial economist at MUFG Union Bank said in a recent interview with Bloomberg TV. “I don’t know who’s trading these markets. It doesn’t feel like its [sic] trading completely logically here.”

This is the distilled wisdom of the mainstream view, this serious malpractice on the part of the media. All throughout the past few years, it has been reported as fact that the US economy was booming; and even more so why it was. QE had worked, therefore the monetary and financial system cannot be at anyone’s issue.

This view was reported as fact despite the fact that it was the contrary, minority position. This wasn’t how it was ever presented, of course, how it was only ever Economists and central bankers who held to it. The long end of the bond curve, indicating the thinking for the vast majority who matter, never once felt the economy was anywhere near the conditions necessary for taking off.

The various financial curves are treated as out-of-the-way niches, some mysterious triviality about which only a few cranks bother to keep track. Jay Powell is described as a towering figure, the man upon whose opinion everything else flows. It is entirely the other way around.

The bond market is what runs the world. Always has. Therefore, even in 2017 this idea the global economy was about to take off was never more than wishful thinking. If the bond market was against it, that skepticism was always the base case in reality. The bond market in addition to being much larger than stocks could ever hope of being, it is made up of agents whose actual practice (and survival) brings them in close contact to the real money of the real economy.

Economists never had any real market support for their view. Not at any point.

And this is why people have such a hard time understanding the way the world goes. When you are taught the backward, mainstream version, the bond market doesn’t make any sense. “It doesn’t feel like it’s trading completely logically here.” Except, the curves have been making the most sense, and have been most consistent in data therefore forecasting than any other place.

Curves are important notices for every economic situation, but you only hear about them when they are inverted. This isn’t some brand new disagreement. MUFG Union Bank’s Economist is of a blue line believer.

The bond market appreciates only too well what the dotted line has meant all along. Nothing has changed since August 2007. There was only ever a much higher likelihood something would go wrong before it could ever go right. In a nutshell, that’s just what May 29 represented – the very thing that went wrong and proved, all over again, how QE was at best an asset swap and at worst a harmful monetary head fake.

You can’t fix a broken monetary system with a head fake. You can try, but in the end you’d only confuse Economists.

With rate cuts becoming more and more the accepted base case even among these people, you really have to go back to the curves and see the last few years evolve exactly how they predicted. The Economists are already partway to admitting this as true. They’ve already gone from BOND ROUT!!! to rate cuts.

This was no trivial journey. BOND ROUT!!! always meant something specific, the inarguable case of recovery. It would’ve been the point at which central bankers had finally convinced the market the liftoff was more than emotional pleading. I wrote last March, with hysteria raging:

In my view, it’s perfectly clear today that to believe the paradigm is changing is to do so from the same blind position of monetary illiteracy. That’s why it’s been to this point nothing but hype.

To now see the mainstream shift toward rate cuts, it doesn’t matter that they will try to say these will help. By the very fact they have given up on the BOND ROUT!!! it shows the boom was only ever hype. Never happened.

There’s was never the majority position. The recovery was always, always the long shot. It was only presented the other way around by a financial media that does the public a tremendous disservice. The bond market never once climbed aboard the boom. And once you see that, you cannot help but appreciate the very real dangers of 2019.

via ZeroHedge News http://bit.ly/2HUJ6Qy Tyler Durden

Judge Tosses Border Wall Lawsuit Brought By House Democrats

A Washington DC district court judge tossed out a lawsuit brought by House Democrats seeking to halt President Trump’s reallocation of funds for a southern border wall. 

Judge Trevor McFadden ruled that the matter is fundamentally political and Democrats have a lack of standing to make a legal case.

In February, Trump declared a national emergency over the flood of migrants at the southern border which have overwhelmed the US immigration system. Shortly after, House Speaker Nancy Pelosi (D-CA) and other House Democrats filed their lawsuit, claiming that Trump was “stealing from appropriated funds” and would be in violation of the Appropriations Clause of the Constitution. The politicians contended that this constituted an “institutional injury” to the separation of powers. 

McFadden, a Trump appointee, disagreed – writing in his opinion: “This case presents a close question about the appropriate role of the Judiciary in resolving disputes between the other two branches of the Federal Government. To be clear, the court does not imply that Congress may never sue the Executive to protect its powers,” adding “The Court declines to take sides in this fight between the House and the President.“

“This is a case about whether one chamber of Congress has the “constitutional means” to conscript the Judiciary in a political turf war with the President over the implementation of legislation. … [W]hile the Constitution bestows upon Members of the House many powers, it does not grant them standing to hale the Executive Branch into court claiming a dilution of Congress’s legislative authority. The Court therefore lacks jurisdiction to hear the House’s claims and will deny its motion.”
— Judge Trevor McFadden

Attorney Will Chamberlain, co-founder of Human Events, suggested in January that Trump declare a national emergency at the southern border – and broke down why Democrats would lose a challenge over lack of standing. 

McFadden began by focusing on two guiding Supreme Court cases he called “lodestars”— the 2015 case Arizona State Legislature v. Arizona Independent Redistricting Commission, and the 1997 case Raines v. Byrd.

“Read together, Raines and Arizona State Legislature create a spectrum of sorts,” McFadden wrote. “On one end, individual legislators lack standing to allege a generalized harm to Congress’s Article I power. On the other end, both chambers of a state legislature do have standing to challenge a nullification of their legislative authority brought about through a referendum.”

But, McFadden quickly distinguished the Arizona State Legislature case, which found institutional standing for legislators only in a limited instance. The Arizona case, the judge noted, “does not touch or concern the question whether Congress has standing to bring a suit against the President,” and the Supreme Court has found there was “no federal analogue to Arizona’s initiative power.” –Fox News

McFadden also noted that Democrats still have the power to modify or even repeal an appropriations law if they wish to “exempt future appropriations” from the Trump administration. 

“Congress has several political arrows in its quiver to counter perceived threats to its sphere of power,” wrote McFadden. “These tools show that this lawsuit is not a last resort for the House. And this fact is also exemplified by the many other cases across the country challenging the administration’s planned construction of the border wall.”

“The House retains the institutional tools necessary to remedy any harm caused to this power by the Administration’s actions. Its Members can, with a two-thirds majority, override the President’s veto of the resolution voiding the National Emergency Declaration. They did not. It can amend appropriations laws to expressly restrict the transfer or spending of funds for a border wall under Sections 284 and 2808. Indeed, it appears to be doing so.”

As noted by Fox News, McFadden’s ruling contrasted with an injunction issued by Obama-appointed US District Court Judge Hawyood Gilliam last week, who blocked the Trump administration from using the reallocated funds for specific areas in Arizona and Texas. 

via ZeroHedge News http://bit.ly/2Z9f8On Tyler Durden

Hedge Funds Suffer Biggest Hit Of 2019 As CTA Float In “No Man’s Land”

It’s probably a coincidence but on the day we warned that the hedge fund “redemption rush” returned, just ahead of news that UK’s Neil Woodford has blocked redemptions from his £3.7bn equity income fund, that the broader L/S hedge fund community suffered what Nomura calculated was a beating on par with the worst day of 2019.

Specifically, as Charlie McElligott writes this morning, after an extended period of outperformance for long/short hedge funds, “thanks to grossed-up shorts having done their jobs–along with “low nets” that come with them”, yesterday’s below the hood behavior was “outright ugly”, and according to the Nomura strategist was “tied for the worst performance day YTD for his model Equities L/S HF (-1.7% on the session) in classic “gross-down” fashion”, as crowded cyclical shorts exploding higher on forced covers (Materials +3.4%, Energy +1.4%, Industrials +0.7%, Financials +0.7%) while crowded longs – recall our Sunday article “These “Most Crowded Stocks” Face The Greatest Risk Of Wipe Out” which again was published at just the right time – were destroyed (Cons Disc -1.2%, Tech -1.8%, Comm Services -2.8%, Software 8x’s EV/Sales -5.2%) — and as such, “it was rationally the worst day for 1Y Price Momentum factor (-2.3% on session) in nearly two months.“

A separate reason for yesterday’s meltdown in hedge fund favorite stocks was the “extreme gamma” positioning we discussed yesterday morning. As Nomura explains, yesterday’s overall Equities trade “was the exact chop-fest you should expect with the “extreme Gamma” market (sum of SPX / SPY $Gamma currently just 1.3%ile since 2013), featuring a 22 handle opening selloff, followed by a 26 handle rally, before a later 30 handle selloff, before another 20 handle rally, a 20 handle selloff, a 15 handle rally, a 25 handle selloff and a 15 handle rally into the cash session close.”

Meanwhile, another way of looking at yesterday’s massive rotation, is that as has been the case frequently in the past, “the big performance drawdown days for US Equities funds continue to come when chronically underweighted / structurally shorted “Value” factor squeezes / rallies against the enormous length crowded into “Growth” factor, which has been accumulated as a duration-sensitive alternative to traditional Defensives”, according to McElligott, and yesterday “was the largest “Value / Growth” ratio reversal higher since late Nov 2016…although nary just a micro-move relative to the decade-long “Growth over Value” phenomenon since the GFC and QE began.”

Said another way—“expensive” Growth stocks were purged (on the somewhat idiosyncratic anti-trust escalations) while “cheap” and heavily-shorted Value stocks were covered—which although only being one day’s worth of behavior IS notable, because it mimics pre-recessionary behavior where Value factor L/S sees signs of life, as Value Shorts (aka expensive Growth Longs) break down first, before Value Longs (aka Cyclicals) begin to outperform on sensitivity to perceived Fed easing / stimulus coming down-the-pipe

As McElligott shows in the chart below, yesterday was the partial unwind/gross down of much of May’s “slowflation” rally in which momentum soared (long growth and defensives, short cyclicals) while value was hit as a result of the trade war growth scare. 

Going back to Monday’s hedge fund hammering, McElligott also notes that when the “Value/Momentum” reversal ratio spikes as it did yesterday, a sharp equities hedge fund performance drawdown follows, something which Neil Woodford is all too familiar with.

Discretionary funds aside, one final observation is what CTAs are doing and about to do. Following on our report from last night that CTAs are now shorting the Russell 2000, and it is only a matter of time before they turn short on the S&P 500, McElligott writes that his own CTA model has seen systematics also “flip short” the NASDAQ (if within range of cover), while CTAs on S&P are in no man’s land: 30 points below re-leveraging levels (2,791 to get to 82% net long), and 25 handles above the 2,735 de-leveraging level to -100% Short”

S&P 500, currently 67.7% long, [2749.6 close yesterday, spot currently 2760], more buying over 2791.31 (+1.52%) to get to 82% , max long over 2938.32 (+6.86%), selling under 2735.48 (-0.51%) to get to -16% , more selling under 2735.2 (-0.52%) to get to -100% , flip to short under 2735.48 (-0.51%), max short under 2735.2 (-0.52%)

And with the S&P now withing close proximity to both buy and sell trigger points for the CTA community, Nomura makes these final observations:

  • The positioning across Global Equities has tilted boldly “Short”
  • The Bonds/Front-End “Long” remains massively in-the-money
  • USD remains a “+100% Long” across all nearly all pairs
  • Commodities are off the extreme “-100% Short” of last month, with Metals tilting “Neutral to Long,” with Crude “Neutral” and Ag products generally still “Short”

And visually:

 

via ZeroHedge News http://bit.ly/2Z7KiGa Tyler Durden

Boris Johnson Snubs Trump, Says He’s “Too Busy” For Meeting

Boris Johnson has basked in President Trump’s praise, touting Trump’s endorsement as yet another reason why he should succeed Theresa May as Britain’s next prime minister. But when the opportunity arose for Johnson to meet Trump, the former foreign secretary snubbed the leader of the free world, saying he was “too busy” to meet with him.

BoJo

Over the weekend, Trump praised Johnson as a “friend” and as a “very talented” politician with whom the US might be able to negotiate a sweeping trade deal (Trump has repeatedly brought up the possibility of a trade deal during his trip, to the delight of Brexiteers who are pushing for a ‘no deal’ exit from the EU). Trump has also compared Johnson favorably to Theresa May (much, we imagine, to the prime minister’s chagrin).

But during a Tuesday morning phone call, Johnson reportedly turned down the opportunity for a one-on-one meeting with Trump because of a Conservative leadership hustings event, according to ITV reporter Robert Peston.

A spokesman for Johnson’s office told British media that the decision was intended to show just how seriously Johnson – who is far and away the favorite to win the Tory leadership contest – is taking the race.

The two spoke on the phone for 20 minutes, and Johnson told Trump he looked forward to meeting at a later date.

However, there’s reason to suspect that the snub was a calculated political maneuver. Polls show Trump isn’t particularly popular with British voters, though Johnson remains the most popular conservative in the country.

Infographic: The most popular Conservatives | Statista You will find more infographics at Statista

Instead of meeting with Johnson, Trump will now instead meet with one of his leading rivals, Environmental Secretary Michael Gove, who interviewed Trump in the days before his inauguration. At the time, Gove was working as a columnist for the Rupert Murdoch-owned Times of London.

Trump might also find time to meet with Nigel Farage, whom he recently recommended should be sent to Brussels to lead the next round of Brexit deal talks.

via ZeroHedge News http://bit.ly/2WpYcqf Tyler Durden

Mexican Tariffs Could Spike Corona And Modelo Beer Prices

Last Thursday, President Trump tweeted he would impose a 5% tariff on all goods coming from Mexico starting next Monday [June 10] “until such time as illegal migrants coming through Mexico, and into our Country, STOP.” The tariff, if authorized by the White House, could make popular Mexican beer like Corona and Modelo, a whole lot more expensive for American consumers, reported CNBC.

A statement published by the White House said tariffs on Mexican imports would surge to 25% if the immigration crisis at the border is not resolved immediately.

A senior Mexican delegation will start high-level immigration talks on Monday in Washington to hopefully resolve the issue and thwart tariffs.

The announcement of possible duties gaped down Constellation Brands’ stock 8% at one point last Friday.

According to Morgan Stanley, 75% of Constellation Brand’s beer portfolio is “entirely imported” from Mexico. MS said in a research note to investors that a 5% tariff would cut 4% rom the company’s bottom line. In the case of a 25% tariff rate, well, the company’s profits would collapse by 19%.

Jim McGreevy, president and CEO of the Beer Institute, spoke with the Chicago Tribune who said tariffs on Mexico would harm the American trucking industry and farmers along the supply chain if Mexican brewers see a decline in activity. US farmers exported $209 million in barley to Mexican beer producers last year, McGreevy said.

It’s likely that the importer on record will pass along the tariff in the form of higher prices to consumers. The beer industry has already been slapped with $349 million in additional costs thanks to President Trump’s steel and aluminum tariffs.

Chicago-based MillerCoors, which imports the Mexican beer Sol, would be another beer to see possible price hikes if the tariffs went through next week. Heineken, which imports Dos Equis and Tecate, are more beers that could see price hikes. Anheuser Busch InBev, which imports Mexican beer Estrella Jalisco, could also see increased prices.

To “Make America Great Again,” consumers will have to pay up for their favorite Mexican beers – at what point does the blue collar worker, living paycheck to paycheck, start noticing soaring prices thanks to President Trump’s trade war?

 

via ZeroHedge News http://bit.ly/2QHuzuk Tyler Durden

Blain: “This Is Crazy”

Blain’s Morning Porridge, submitted by Shard Capital’s Bill Blain

An Angel who not so much as Fall, as saunter vaguely downwards…”

This is crazy. Some analysts are predicting 3 Fed eases by year end. Australia and New Zealand have cut rates. German yields are now negative 0.21%. Nothing screams recession more loudly!

The market is discounting US rates 70 bp lower. Everyone is listening for what the Fed says next, and it’s a Fed heavy schedule of speakers this week. Fed Head Jerome Powell could firm the tone when he speaks later today, but we’ve already had a former hawk, Lael Bullard warning “downward policy may be warranted”.

What’s really happening? A pre-emptive Fed getting ready to mitigate the negative effects of Trump’s trade twitter war on the economy? Or does the real data really suggest the last thing the US needs is further monetary distortion from overly low rates, and what’s really happening is the Fed pandering to a wobbly stock market? Massive deflationary risk somewhere down the timeline?

The stock analysts are loving it. They see lower rates driving renewed upside – they don’t care about the long-term distortions! All they want is a schweet short-term hit of rate ease to put stocks back into the stratosphere.

When bonds are yielding very little (I was going to say the square root of nothing, but one investment banking pedant sent me pages of maths y’day explaining why that isn’t a good metaphor), then it stimulates dangerous yield tourism. Low rates encourage bad things – like corporates to overleverage themselves to mount stock buybacks with debt – which increases executive bonuses but doesn’t build new factories or infrastructure. The end-result is a more distorted market reliant on lower for ever rates to stop the bubble bursting.

Short-term, its great. Fill your boots with stocks. Long-term…. Be very aware it is not real.

Perhaps the bubble is fraying in the tech sector. Yesterday’s news about anti-trust investigations into names like Facebook, Alphabet, Amazon and others might have been a light bulb moment – but its been enough to remind investors of regulatory risk as the US agencies divvy up names to attack!

Instead of dwelling on the distortions of the Anglo-Saxon markets, lets take a look at Europe. If you really want a disappointing stock to follow, then try Germany’s “leading” bank. It’s so bad, I thought I’d find Neil Woodford listed among the largest holders of the stock!

As Deutsche Bank tumbles to new lows – dragging other lame European banks in its plummeting wake, you have to wonder where it ends? It’s getting embarrassing – you almost wish they’d do the honourable thing. But no, the CEO, Christian Sewing is coming back with yet another plan to cut headcount in rates and equity trading to restore profitability by the end of July.

The cost of CDS protection has rocketed, but I’m actually surprised the bank’s CoCos aren’t lower given Deutsche’s previous history of pleasing investors when its missed calls! I’m afraid DB looks, smells and feels like a complete FUBAR. I’m awarding Bloomberg a “No-Sh*t Sherlock” for pointing out investors are frustrated at its 90% decline since the Global Financial Crisis. NSS!

But its not just Deutsche. Right across the whole European Banking sector the names honk and are spiralling lower in a sea of red. European banks – you’d have to be daft to buy them… yet more than a few stockpickers say… “they will represent value, soon!” Anything – with the possible exception of DB – has value when it is cheap enough.

When I were young… European banks dominated the league tables for bank lending, IPOs and Eurobonds. Today, they are practically absent. Why have the Americans thrived while Europe has rotted? It’s a question of environment and oversight. The US authorities aggressively dealt with banks during the crisis. Lehman demonstrated they were serious. They forced banks to accept recapitalisations and the banks responded by paying back as quickly as they could. And the banks were encouraged to go out and starting banking again.

In Europe, the banking crisis came later, and the banks never so thoroughly cleansed and reinvented themselves. Their underlying weakness was considered a secondary aspect of the European sovereign debt crisis. Free TLTRO money from the ECB kept them afloat, but primarily allowed them to stabilise spiralling European sovereign debt markets. But… there was no rebuild, and no reinvention of banking. European banks remain essentially national banks, meaning post-crisis austerity kept them from any kind of stable recovery, and unable to really address ongoing bad lending.

We all know the European banks’ obvious problems. They are getting spanked by low interest rates, falling bond yields, and rising trade war threats. But it’s a more complex story; rising regulatory costs and compliance will soon exceed 10% of revenues across Europe dismal banking scene. The fact most European banks trade below asset value hints that we don’t believe where the banks value these assets. No surprise. Banks holding assets in basket case countries – yes, I am thinking of Italy – remain vulnerable. Deutsche is the worst – trading at 18% of book value. Isn’t Germany supposed to be Europe’s economic hot spot?

Years of ultra-low and negative European banks has done nothing to improve credit quality. Instead, its enabled Zombie borrowers to survive for longer, meaning any recovery is likely to trigger a normalisation in default rates. And European banks are still plagued by high NPLs.

It’s not just Deutsche. The WSJ recently pointed out that the eight largest European banks have triple the assets, but are worth less than JP Morgan! Italian banks are massively exposed to Italian debt – and there isn’t any way that’s a positive. Even decent names like BBVA and Santander are getting caned – they had the good sense to seek earnings outside Europe, but this week are pulled down by their Mexican affiliations.

Where do we think European banks are going? They are burdened with an overbanked market, aging systems, a lack of resources to digitise and re-invent their services, and there are still no signs of any European banks emerging as cross border champions. European banking union is another EU initiative that seems to have drowned in the sea of bureaucracy that sinks everything. Governments still see their duty as protecting national banking champions. There is repeated regulatory failure; Danske Bank in terms of money laundering and the collapse of Spanish and Italian banks doesn’t help. No European banks are expanding, building market share. Instead they are all and have been retrenching.

If I could think of something positive to say about Europe, But I really can’t…. 

via ZeroHedge News http://bit.ly/2Ii5P8h Tyler Durden

Beware The Bounce Or Buy The Dip?

US equity futures and Treasury yields are trading higher this morning following yesterday’s tech wreck and bond buyathon but relative strength signals are flashing warning signs that the risk of reversion looms large…

Treasury yields are ‘most oversold’ (bonds most overbought) in 21 years…

And stocks are most oversold since the December lows…

We suspect the real canary in the coalmine for a bounce will be HY credit which has been the high-beta horror of this latest collapse…

And has the ‘correction’ run its course as liquidity is re-injected to save the world?

So which is it? Beware the bounce or buy the dip?

via ZeroHedge News http://bit.ly/2XpN1tT Tyler Durden